SFG merger with WHK off, for now
A forecast 20 per cent decline in earnings by WHK Group announced to the Australian Securities Exchange (ASX) last week proved to be the break point for SFG's non-binding merger proposal, which was formally abandoned yesterday.
However the abandonment might amount to a postponement if WHK can restore its fortunes.
SFG said it had contemplated a friendly scrip-based merger, with shared board and management control, but it became clear yesterday that WHK's challenges were such that the shareholders of both companies were unlikely to emerge satisfied from the transaction.
SFG has signaled it will revisit the proposition on the basis of how successful WHK is in addressing its problems via its business transformation strategy.
It said it would "consider a revised proposal" once the parties are in a position to review each other's full financial year 2013 performance and full-year 2013 outlook, including the status of their respective business transformations and strategic initiatives at that time.
The degree to which WHK remains on SFG's radar was revealed in its ASX announcement yesterday, in which it said that it remained of the view that the convergence of financial advisers and accountants would continue and that "a combined SFGA and WHK would be uniquely positioned to provide enhanced services to these clients across Australia and New Zealand".
With the WHK merger off the agenda for the time being, SFG said it would continue to evaluate other growth opportunities including "potential tuck-in and transformational transactions".
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